What does Staking Crypto Mean?
Updated: Dec 15, 2022
Staking crypto in DeFi, or decentralized finance, refers to the process of holding a certain amount of cryptocurrency in a wallet or on a specific platform in order to earn rewards. This is typically done with proof-of-stake (PoS) cryptocurrencies, which operate differently than proof-of-work (PoW) cryptocurrencies like Bitcoin.
In PoS systems, the creator of a new block is chosen based on how many coins they hold and how long they have held them, rather than the computational power they can provide. This means that users who hold and stake their coins on the network can earn rewards for helping to secure the network and validate transactions.
DeFi platforms allow users to stake their crypto assets and earn rewards without having to set up and maintain their own staking infrastructure. This can be an attractive option for users who want to earn a passive income from their crypto holdings but don't have the technical expertise or resources to set up their own staking setup.
Staking in DeFi has become increasingly popular in recent years, as more and more users look for ways to earn a return on their crypto assets. In addition to earning rewards, staking can also provide users with a stronger say in the governance of the network, as they are able to participate in decision-making processes through their staked assets.
Overall, staking crypto in DeFi allows users to earn rewards on their holdings while also contributing to the security and growth of the network. As the DeFi space continues to evolve, it is likely that staking will play an even bigger role in the industry.
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